Yes, it’s that time again — The beginning of whole new month! Typically I put out a Dividend Income and Expense post at the beginning of every month, but this month I’m a little behind schedule.
I wanted to finish the post on Winning The Thermostat War first, so this post was a little delayed.
As usual, the purpose of these Dividend Income And Expense reports is to provide an in-depth look at how we spend (and make) money as a Financially Independent family.
It’s not all crumpets and tea cakes, but it sure is a fun way to live!
Activities in February
February was a busy month — We spent a lot of time socializing with friends, playing board games, and cooking at home. Oh… and planning our next family vacation! We’re headed to Texas!
Even though the Pacific Northwest isn’t known for lots of snow, we still had a few solid snow days in February!
Snow is great free entertainment for the kids of course — They get super excited when it starts snowing, and immediately run outside to play in the all the frozen white stuff. Free entertainment is the best entertainment.
Not all activities this month were quite so cheap — One rare sunny day we went mini-golfing with friends. The cost of this outing was a ridiculous $68. Who knew mini-golf was going to be so expensive?
The kids enjoyed the experience, but I’m not sure we’ll go again at that price.
Expenses in February totaled $6,454. This was a high monthly total for us, mainly due to the cost of airline tickets. The additional travel expenses can be found in the Other category.
Even though we ate incredibly well in February, our food total was lower than average — a mere $432 for the month. I attribute this to a slightly shorter month and plenty of good grocery store sales!
Want to know how we eat so well, for so little? — There’s actually a post about it.
Despite our low food costs, we eat like kings. February included several (three!!) delicious dungeness crab dinners.
I couldn’t resist the low prices on fresh Alaskan crab ($3.99/lb), so we indulged a little bit. Yes, it’s a splurge — but what else is financial independence for?
Enjoying life is at the top of my list.
One thing my kids really enjoy in life is pizza. They’re always asking me for pizza. Rather than blow a perfectly good $50 on delivered pizza, I make it at home for just a few dollars.
I really like making pizza at home — it’s one of those things that turns out WAY BETTER than anything you can order from a pizza shop.
Carnitas tacos were also on the menu in February — pork shoulder was on sale for $1.47/lb! This is one of those dishes that uses an extremely cheap cut of meats, and it usually takes all day to prepare.
Rather than standing in front of a stove all day, I set up all the ingredients in the slow cooker and come back 6 hours later.
Despite being really cheap meat, the pork shoulder is fall-apart-tender after about 6 hours in the slow cooker.
As you can see, we managed to eat well AND remain under-budget.
For the Tako family, financial independence isn’t about denying ourselves the good things in life — it’s about allocating each of our dollars for maximum benefit.
Good food is just one expression of this principal at work.
Fuel costs were very low for the month of February, at $40. We usually spend about $100 on fuel in a typical month of driving.
The difference in fuel costs appears to be unintentional timing between fill-ups — One happened right before the first of February, and another happened right after the 28th. Dumb luck I guess.
Mortgage And Childcare
As usual, our mortgage and childcare expenses were the bulk of our monthly spending at $4450.78. These are our two largest monthly expenses, but we consider them entirely optional.
Why? Both expenses can be eliminated at any time — We could take the kids out of daycare and keep them home with me (I wouldn’t have time to blog), and our mortgage could be paid-off with unused cash.
Thus, we choose to pay these large bills on purpose because of the advantages they provide — The kids are becoming fluent in a second language at daycare (which should provide benefits later in life).
For the mortgage, I’m betting I can find investment returns greater than the interest on our home loan. So far this has proven to be true, but I’ve got a good 20 years before the storybook is closed on this one.
Utilities for the month consisted of a gas/electricity bill of $154. This is a typical high winter power bill for us because of additional heating and laundry drying. (It’s extremely wet in the Pacific Northwest, so we need to use a dryer in the winter)
Winter power bills are expensive, so we do our best to save money by not keeping the house overly warm. We keep our extremities warm instead.
In the summer months, the power bill usually drops to $100/month. I expect that will be the case again this summer.
The “Other” category is where all the fun stuff is this month. The biggest expenses are travel related — we purchased four airline tickets to Texas ($903), airport parking ($106), and a rental car ($224) for our trip to the Lone Star state.
The trip is happening in March, but we saved a bunch of money by prepaying for items (like parking) whereever possible.
No, we didn’t try to travel hack this trip, so I won’t try to regale you with tales of free travel. Yes, it was expensive. Travelling with a family isn’t cheap and there’s going to be more expenses once we arrive (food, hotels, entertainment, etc).
In total I estimate the trip is going to cost us about $2,000. On the bright side, this trip is going to be far cheaper than our Japan trip, which totaled $5,690.
We now have two months on the books in 2018, and we’ve spent a total of $12,016. That’s $6,008 per month.
This amount is roughly inline with last years spending of $73,173. We’ll probably spend a similar amount in 2018.
Dividends For February
Now for my favorite part of this post — the dividends!!
Unfortunately, dividend income from our taxable accounts was only $359.60 in February. Yes, I realize that’s not a lot compared to our $6k in spending.
This just how the dividend game is played — some months are feasts and others are famine. Our biggest dividend payments usually happen in March, June, September, and December. Look for the feasts then.
For the year so far, we’ve earned a total of $2,380 in dividends. This doesn’t sound terribly exciting by itself, but our goal is to earn $53k in dividends for the year.
The Tako family makes zero effort to smooth out these lumpy dividend results. Instead, we maintain a health cash balance in the checking account, which we routinely refill from our brokerage accounts.
Investment Changes In February
February brought significant (10%) drops in the stock market, but I didn’t manage to pull the trigger on any new stock. We didn’t invest any excess cash. Valuations were slightly better on a few stocks, but in my opinion the market was still very expensive.
Meanwhile, Mr. Market kept-on quoting different prices. Some days were higher, and others were lower — but none were enticing enough to draw out my greenbacks.
Some people ask me, “Don’t you fear missing out on another year of big stock market gains?”
No, because I never attempt to make money from the stock market. Stock market returns are unpredictable, and I can’t predict the future. I make my money from owning businesses. (Small pieces, but businesses nonetheless.)
This means I’m content to sit on the sidelines and wait for my price. It’s one of the great challenges for any good investor — the waiting.
To quote a section from this year’s Berkshire Hathaway shareholder letter:
“In the next 53 years our shares (and others) will experience declines resembling those in the table. No one
can tell you when these will happen. The light can at any time go from green to red without pausing at yellow.
When major declines occur, however, they offer extraordinary opportunities to those who are not handicapped
Are you ready for a major decline?
[Image Credit: Flickr1]